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SavvyBI and empower analytics monthly electricity market report sept 20

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SavvyBI and empower analytics monthly electricity market report sept 20

  1. 1. 1 Oct 2020 Sep 2020 September 2020 Monthly Market Report National Electricity Market
  2. 2. © SavvyPlus Consulting 1 Oct 2020 Sep 2020 Introduction 2 Executive Summary Gas Market The average wholesale gas prices increased again in QLD for the third month running, with an average price just above $5/GJ. The southern states saw gas spot prices fall during September, VIC recording the lowest average gas spot price at just below $4/GJ. Market News It was a big month in the news for the energy markets with many important and developments. We have five pages recapping everything you need to know for September. Special Features 1. Power Purchase Agreement pricing history. 2. Energy Security Board releases the Post 2025 Market Design Consultation Paper 3. New generation project onboarding 4. Wind generation capacity factors across the NEM At-a-Glance September was another month where records tumbled across the NEM, head to our “At- a-Glance” section for the detail. LGC Spot prices LGC price had been steadily rising during the past two quarters with the spot price nearing $50 per certificate in mid-September, before tumbling to $42 per certificate by month end.. Electricity Forward Market Electricity forward prices softened across the NEM during September, VIC and SA seeing the largest movements. VIC Cal- 21 softened by $4/MWh during the month, while SA fell by more than $6/MWh. Records tumbled during September in the National Electricity Market. Average spot prices plummeted across the NEM, with QLD, SA and VIC experiencing record levels of negative prices. SA setting a record low monthly price of $15.21/MWh during September. The remaining regions all saw the lowest September average prices in the past 6-10 years resulting in a weighted average price across the NEM of $33.20/MWh for September. $33.20 /MWh Intermittent generation levels were at record levels across the NEM. QLD and TAS both recorded record levels of wind generation while the other three regions all recorded record levels of intermittent generation for the month. QLD, VIC and SA all saw record low demand during the month, pushing baseload generation to record levels.
  3. 3. 1 Oct 2020 Sep 2020 3 Market News Headlines 8 Sep, The Queensland government has allocated $500 million to fund manager, Queensland Investment Corporation buying up local assets, considering a potential bid for the Dalrymple Bay coal terminal in a bid to increase public ownership of commercial renewable projects whilst supporting infrastructure. With few details outlined, Queensland Energy Minister, Anthony Lynham said the cash injection would support thousands of jobs in the renewable sector and put “downward pressure on power prices”. Palaszczuk’s $500m clean energy buying spree 4 Sep, With plans for a gas lead recovery out of the COVID-19 pandemic, the Federal Government is looking at a plan to secure gas from east coast producers in a bid to lower prices for manufacturers. The proposed plan, involving pipelines in Queensland, NSW, the Northern Territory and South Australia would aim to solve price and supply tensions that have long impacted the east coat market. Fed Govt plan to buy gas to lower prices 15 Sep, The 275MW Darlington solar farm project in south west NSW, has sent its first output to the grid as it ramps up to full production. The project, jointly owned by Octopus Investments and Edify Energy, received its registration with the Australian Energy Market Operator installing two large synchronous condensers to help it negotiate network strength system problems and grid congestion issues. Australia’s biggest solar farm send first output to grid 14 Sep, Scott Morrison has outlined a five year economic blueprint to protect jobs and industries and deliver cheaper and more reliable energy. Under the plan, delivered ahead of the October 6 budget, the Prime Minister is supporting a gas-lead COVID-19 recovery committing $211m to support the building of an extra 780 megalitres of onshore diesel storage and building a “sovereign fuel supply to shield us from potential shocks in the future”. The $211m fuel security package will support investment, promote job creation across various sectors and continue to support Australian refineries. PM’s 5 year blueprint for energy security lifeline 14 Sep, The latest gas inquiry report from the ACCC comes as no surprise to most Australian energy consumers as it details our gas and electricity prices are too high due in part to a dysfunctional gas market that lacks competition. With east coast manufacturers paying on average 150% more for gas and 175% for electricity than 10 years ago, the ACCC chairman, Rod Sims found that this occurs even with declining gas and electricity spot prices and concluded a lack of competition and lack of supply contributed to this disconnect. Australian still paying too high gas and electricity prices 8 Sep, Record low wind prices are on the table for Canberra following the announcement that the ACT government has announced Neoen will supply the state with 100MW of wind power along with a 50MW battery. They have also awarded Global Power Generation the supply bid of 100MW of wind power from the Berrybank wind farm in Western Victoria, in addition to 10MW/20MWh battery to be built in Canberra. Positioning themselves as the nations climate action capital, the ACT climate change and sustainability minister, Shane Rattenbury that these new agreements would help maintain the current renewable electricity targets that the state has achieved, despite continuing population growth, increased adoption of electric vehicles and a push to see households switch from gas to electric appliances. Two big batteries secured for Canberra 8 Sep, A new innovation developed by Newcastle University in the form of a metal alloy brick could be the answer to efficiently storing renewable power as thermal energy. MGA Technology is bringing the alloy, known as Miscibility Gasps Alloy to market and is “aiming to bridge the gap between cheap and abundant renewable energy and the ability to store and dispatch energy at any time of the day or night” according to lead researcher/scientist Professor Eric Kisi. The new technology has been cautiously welcomed by the industry with the need for speed, efficiency and energy production to be further explored. Newcastle Uni develops thermal blocks break through 9 Sep, Iberdrola has come out on top after UAC Energy sold its 19.9 per cent stake ending a long stalemate that ended with Iberdrola retaining 97 per cent of Infigen’s shares on issue, gaining the right to full control of the company. UAC Energy sells Infigen stake. Iberdrola wins takeover 2 Sep, State Energy minister, Lily D’Ambrosio is seeking to secure 600MW of new solar and wind energy capacity for Victoria, through a second Renewable Energy Target auction. Detailing a “market sounding process”, the Minister said the auction will support the government’s push for 100% renewables to create more jobs and lower emissions; but it comes at a time when the state is struggling to accommodate existing renewables capacity resulting in delays to major projects. 600MW wind & solar sought by Victoria 2 Sep, SA’s Tesla battery has expanded it’s output by 50 megawatts, delivering 150 MW after weeks of testing. With more than 278,000 houses in South Australia having solar rooftop solar panels, South Australia’s energy minister welcomed news that this upgraded technology would prevent large scale blackouts and had contributed to driving down power bills for consumers in his state. South Australia’s Tesla battery expanded by 50%
  4. 4. 1 Oct 2020 Sep 2020 4 Market News Headlines 17 Sep, Bell Bay in Tasmania’s north is being considered a possible location for the new $70 million hydrogen export hub following the announcement of a $1.9 billion investment into new energy technologies by the Scott Morrison. The lucrative export hub will see Tasmania compete with VIC, NSW, SA, QLD and WA in a hydrogen industry touted as a major energy source of the future. Tasmania in race for $70m hydrogen export hub 15 Sep, The Prime Minister is seeking plans from energy providers to come up with 1,000MW of dispatchable energy in time for the end of 2023 citing unacceptable potential price increases and concerns around adequate dispatchable replacement capacity risk rises. If investment is not secured by April 2021 the Federal government is proposing to build a state run gas generator but said the market has a clear obligation, as an essential service, to step up and deliver affordable, reliable power for consumers. Federal government issues gas ultimatum 17 Sep, Scott Morrison has announced plans to change the investment rules surrounding funds from the Australian Renewable Energy Agency and the Clean Energy Finance Corporation. With rules expanded, the changes and a committed funding boost of $1.9 million would allow both agencies to invest in new technologies including carbon capture/storage, hydrogen, soil carbon and green steel. Funding changes for ARENA and CEFC 17 Sep, The Government has announced it will invest another $50m into carbon capture and storage as part of its $1.9b “new technologies” package. Although carbon capture and storage has been backed by the likes of the International Energy Agency, the International Panel on Climate Change and various fossil fuel lobbies in a bid to reduce emissions, it has failed to gain commercial success globally. Carbon capture/storage to get another $50 million 17 Sep, Federal Health Minister, Greg Hunt believes there is overwhelming community opposition to the location of AGL’s proposed LNG import terminal in Victoria’s Mornington Peninsula arguing it is the wrong location for a large industrial facility. Having received over 4000 submissions an Inquiry and Advisory Committee is holding a public hearings process starting on October 12 and combined with a Victorian government environmental assessment slows the project further with first gas now likely in 2023 at the earliest. AGL’s LNG import terminal in the “wrong location” 17 Sep, In a first for Tesla’s first virtual power plant in South Australia, regulatory approval has been won to increase its capacity to 10MW. The Tesla big battery, officially known as the Hornsdale Power Reserve has received approval for 10 MW of capacity in all six of the FCAS contingency markets and whilst most of the FCAS supply, more than 2,500MW has been supplied by coal, gas and hydro plants, big batteries are now increasing their share in the market. SA’s Tesla VPP first to lift FCAS capacity to 10MW 17 Sep, With RES Australia appointed as construction and asset manager, construction is set to begin on the 162 MW Columboola solar farm in Queensland’s Western Downs region. The $320 million solar project, a recent acquisition of South Korean based Hana Financial Investment group, recently announced financial investment of $200 million in debt finance from three top tier international banks, led by Australia’s ANZ with $120 million in equity. Columboola Solar Farm to begin construction 16 Sep, The announcement by the Australian Government of plans to accelerate the $250 million Marinus Link project has been welcomed by TasNetworks with the welcome investment of $1.4 billion value to the Tasmanian economy and 1,400 direct and indirect jobs with the ability to unlock further investment opportunities in the state. PM announces Marinus Link as critical project 16 Sep, A recent challenge by Scott Morrison to the energy industry to generate 1,000 megawatts of power, to ward off pursuit of a gas fired power station, has been welcomed by Australian tech entrepreneur billionaire, Mike Cannon- Brookes. The co-founder of Australian technology firm Atlassian, was seeking further clarification of the ground rules, even putting in a call to Tesla founder, Elon Musk before questioning whether the technology solution has to be gas and suggesting the Prime Minister put the challenge out to tender so that market has a chance to respond. Mike Cannon-Brookes accepts PM’s energy challenge 15 Sep, Oil and gas giant Santos, along with gas pipeline owners have backed the Federal Government’s pledge to support and subsidise new gas infrastructure despite analysts saying the business case is “poor” and the need for new pipelines unnecessary. Whilst acknowledging the National gas infrastructure plan as welcome, Santos chief, Kevin Gallagher questioned the “missing links” in the east coast gas grid that would connect up new projects and basins. Big gas backs plan, analysts say business case is poor
  5. 5. 1 Oct 2020 Sep 2020 5 Market News Headlines 21 Sep, Federal energy and emissions reduction minister, Angus Taylor has welcomed the news that the Emissions Reduction Fund (ERF) has secured its largest purchase of emissions abatement in almost three years. With 7 million tonnes of abatement purchased from 35 projects, and an average abatement price of $15.74 per tonne Minister Taylor welcomed the news despite lingering questions about the funds ability to deliver sufficient emissions cuts to meet the governments 2030 targets. Latest Emissions Reduction Fund auction 22 Sep, AEMO has selected Microsoft software to build an IT system capable of administering its new rapid settlement rule. The new IT system will also create a “digital twin” of the national electricity market (NEM) and will allow settlement in five minute blocks in response to the rapidly changing dynamics of the electricity market, as well as allowing the market operator to read more than 1 million meters an hour and process power more cost effectively. Microsoft tech to overhaul electricity stock exchange 18 Sep, A newly released report commissioned by the Bob Brown Foundation has called into questioned the viability of Tasmania’s multi-billion dollar “Battery of the Nation” questioning whether Victoria will actually need its “deep storage” amid growing concern that Tasmania could wear the massive costs. The report questions the need for long term storage and the money that can be made and says battery storage built in Victoria might be a better and cheaper option and could divert much needed funds from other technologies and investments that would be far more useful in cutting emissions. Viability of Tasmania’s Battery of the Nation plan 22 Sep, Energy Minister, Angus Taylor has revealed plans for a carbon emissions target for 2035 for Australia although his commitment did not extend to detailing plans to meet his low emissions road map. Angus Taylor unveils Coalition’s 2035 carbon plan 22 Sep, Australian supermarket chain Coles has sealed a deal with retailer/generator CleanCo to source nearly all of the electricity for its Queensland stores from locally generated solar and wind. From July 2022 the 10 year contract will see Coles power more than 90% of its Queensland sites with renewable energy buying 400GWh of electricity per year from Neoen’s Western Downs Green Power hub and Acciona’s MacIntyre Wind farm. Coles deal to power Qld operations with solar and wind 22 Sep, With fears that Alcoa, owner of Victoria’s Portland aluminium smelter, could be forced to close its door as early as next year, AGL Energy has announced plans to walk away from a new discounted power contract. Initially, AGL and the ACCC had confirmed a proposed rescue plan to safeguard the future of the smelter and its 500 strong workforce but have not proceeded with this plan citing a lack of industry participation and the conditions required for a successful consortium. AGL drops Portland rescue plan 22 Sep, Clean energy project developer Genex has secured the location for its Bouldercombe Big Battery partnering with Powerlink to site the battery adjacent to the Bouldercombe 275kV/132kV substation near Rockhampton. With an anticipated construction slated for the second quarter of 2021 the Bouldercombe big battery is expected to be sized at 50MW/75MWh and will earn the title of Queensland’s first stand alone big battery system. Genex secures network deal for Qld big battery 20 Sep, Scott Morrison says net zero carbon emissions by 2050 is achievable despite a lack of commitment to a hard energy target. With his focus firmly on technology and not the net zero 2050 target, Morrison previously announced backing for a new Hunter Valley gas power plant to replace the Liddell coal fired station if private sector investment isn’t forthcoming. PM confident of achieving net zero emissions by 2050 18 Sep, A group of 37 eminent Australian energy, engineering, economic and environmental experts have sent a second letter to the Prime Minister warning that inflated costs associated with the massive Snowy 2.0 pumped hydro project will blow out to nearly $10 billion. Concerned by the many “overstated and false claims” used in the argument to prop up the project, they have called for a comprehensive review. Recently released projections by AEMO highlight further “inefficient, unnecessary and damaging” concerns about the future viability of the project and confirm the experts view that Snowy 2.0 will be a”$10 billion white elephant”. Snowy 2.0 turning into “$10 billion white elephant” 17 Sep, Tasmania’s Energy minister, Guy Barrett is confident that investors will be “knocking at the doors” to be part of the $3.5 billion proposed Project Marinus, ready to begin in 2023 despite having no firm offers of financial backing. Energy Minister confident investors will fund cable
  6. 6. 1 Oct 2020 Sep 2020 6 Market News Headlines 23 Sep, Genex has indicated it would miss the 30 September deadline for financial close for the Kidston Pumped Hydro project as it seeks to finalise negotiations with its project partners. Insisting the ground breaking project is ready to go, even though the deadline wasn’t reached at the start of July, Genex is still confident of locking in $610m from the Northern Australia Infrastructure Facility to secure its future. Genex flagship hydro project seeking more time 24 Sep, The International Energy Agency has called for a huge increase in investment in carbon capture and storage. With projects totalling $38.2b ready to go ahead in the next 12 months, the IEA says greater investment is required to keep pace with energy and climate goals. The Morrison government has it as one of five priority technologies to be funded to help reach future emission reduction goals. Carbon capture vital but needs huge investment: IEA 28 Sep, In keeping with a rapidly developing push for gas- fired power in the Hunter Valley, Jemena is planning a $400 million extension of its main gas trunkline from Victoria to Sydney. With the Morrison government prioritising the building of gas infrastructure to support economic recovery from the COVID-19 pandemic, Jemena has stressed the importance of leading a gas-fired recovery with its other plans announced earlier in the year. Jemena taps into Hunter gas power plan 27 Sep, Spanish group Elecnor, has won a $500m contract to build the 720-megawatt New England Solar farm in Uralla, northern NSW. Although initially facing growing opposition, the grid connection agreement has been signed with NSW’s Transgrid and is expected to take two years to complete the first stage which will include a 50MWh battery with a further 300MWh of capacity being approved. Elecnor wins $500m New England Solar farm contract 29 Sep, Leading credit ratings agency, S&P has downgraded the government owned energy utility Snowy Hydro, from A to BBB+ amid concerns about potential cost blowouts, falling wholesale prices and current hydro levels. It has also revised downward the “stand-alone” credit profile to bb+ from bbb- and were it not for government backing any level below bbb would therefore be considered “junk status”. Numerous concerns have been raised about the long term economic viability and environmental impact of the scheme with concerns that its vast storage will be rarely used. Snowy credit downgraded 27 Sep, One of the largest electricity contracts is up for grabs following the decision by Alcoa Portland to invite bids to secure the future of their under-threat aluminium smelter in Victoria. Given the smelter requires an electricity contract priced at just $50 a megawatt hour, which is close to current wholesale spot prices, it will be interesting to see whether this deters any of the larger players given concerns that the facility could be forced to shut its doors next year. Alcoa Portland invites bids for electricity supply 24 Sep, The Tesla big battery in SA has delivered a one-off profit boost of $A27m in the first half of 2020. Commissioned in 2017, with an initial capacity of 100MW/129 MWh, recent expansion lifted its capacity to 150MW/194MWh delivering savings to consumers estimated at more than $150 m. Stunning windfall for Telsa big battery in SA 23 Sep, AGL is expanding its “virtual power plant” program, installing discounted solar battery systems in households in NSW, Victoria and Queensland as it works toward a 2024 target for storage. The program begun in Adelaide in 2016 building a network of connected solar batteries that are called on to provide energy when the grid needs it. AGL expands “virtual power plant” beyond S.A 22 Sep, Tomago has reopened negotiations with AGL seeking a cheaper electricity contract citing a tough period of trading and depressed metal prices which place the smelter in an unsustainable position. Discussions with AEMO investigating different payment models are ongoing as they seek to support the electricity grid in NSW to avoid potential blackouts. Tomago seeks cheaper energy deal 24 Sep, With months of due diligence behind it, ENEOS Holdings are preparing a bid for several wind farms in Australia, owned by UK investor John Laing group. Whilst ENEOS’ emergence is a surprise, it is seen by analysts as a another sign of blossoming interest in the local renewables sector. The bid date of October 8 has been pushed back a fortnight to allow for extra time to source funding and complete documentation. ENEOS in contention for John Laing portfolio 21 Sep, With the growing realization that coal fired electricity is a thing of the past, the Morrison government is embracing gas, demanding that 1000 megawatts of new gas capacity was needed to replace NSW’s Liddell coal fired power station, which will close in 2023. Energy politics transition from coal to gas
  7. 7. 1 Oct 2020 Sep 2020 7 Market News Headlines Source: Financial Review PM announces the Gas-fired Recovery Plan and NSW approves Narrabri Gas Project On the 30 Sep, the NSW Independent Planning Commission approved Santo’s $3.6b Narrabri coal seam gas field which has the potential to supply half of NSW’s gas demand. Earlier in the month, the Prime Minister announce the Gas- fired Recovery Plan. The plan aims to: • Create the Australian Gas Hub to be located at the existing Wallumbilla Hub, but trading as an open trading system modelled after the Henry Hub model used in the United States. • Set new gas supply targets with states and territories and enforce potential “use-it or lose-it” requirements of gas licenses. • Unlock five key gas basins starting with the Beetaloo Basin in NT and the North Bowen and Galilee Basin in QLD, at a cost of $28.3m. • Avoid supply shortfall in the gas market with new agreements with the three east coast LNG exporters that will also strengthen price commitments. • $13.7m in support to CSIRO • Explore options for a prospective gas reservation scheme to ensure a reasonable price for consumers. • Reform regulations to promote competition and transparency.
  8. 8. 1 Oct 2020 Sep 2020PPA Price History The ACT Government recently announced awarding a long-term renewable Power Purchase Agreement (PPA) to Neoen using a wind farm from the SA Goyder Energy Hub. The PPA price is a record low at just below $45/MWh for a 14-year term and the price is not subject to any escalation. The chart below shows the wind farm run-of-plant PPA market prices according to public information and estimates undertaken by SavvyPlus over the past 4 years. Looking at like-for-like PPA prices, it is possible to compare the Hornsdale Wind Farm prices with the Goyder Hub Wind Farm PPA price as both wind farms are located in SA, and both PPA’s were transacted with the easily bankable ACT Government. The table below shows the PPA prices for the 20-year Hornsdale Stages 1, 2 and 3 along with the 14-year Goyder wind farm PPA. Prices have fallen from $73/MWh in August 2016 to less than $45/MWh in September 2020. Wind Farm Quantity (MW) Date Price Term (Years) Hornsdale Stage 1 100 Feb-15 $92.00 20 Hornsdale Stage 2 100 Mar-16 $77.00 20 Hornsdale Stage 3 100 Aug-16 $73.00 20 Goyder Stage 1 100 Sep-20 $44.97 14 The Corporate PPA market has been slowing down and this is due to in our belief: 1. The wholesale forward market for the next 3-years has softened appreciably making the Business Case for long-term PPAs tougher to justify 2. The original Corporate PPA sector was prepared to absorb the roller-coaster ride associated with run-of-plant PPAs, but the next wave of Corporate buyers are seeking a firmer PPA so they are not exposed to the vagaries of whether the wind is blowing, and the prevailing spot price? 3. The retail market has generally been slow to recognise the product sought by the next wave of Corporate consumers and therefore has not been well prepared to meet the market’s requirements Given public confirmation that the cost of renewables has continued to fall, this provides a stimulus for further Corporate PPAs, provided the Retailers are ready to offer firmer PPAs at a fair rate, and the Corporate sector is prepared for a long-term agreement.
  9. 9. 1 Oct 2020 Sep 2020ESB Market Design Paper The Energy Security Board releases the Post 2025 Market Design Consultation Paper The ESB has released the Post 2025 Market Design Consultation Paper in which it outlines the four key challenges faced in the redesign of the electricity system (summarised right) and the seven workstreams set up to consider the issues and development of potential solutions (as outlined below). Responses to the consultation paper are due 19 October. The following paper “Market Design Options” is set to be released for consultation by Jan 2021 and final recommendations to the National Energy Council are expected to be delivered by mid- 2021. Source: COAG
  10. 10. 1 Oct 2020 Sep 2020SA & TAS Onboarding TAS Cattle Hill WF (148MW) has stepped up to 70MW TAS Granville Harbour WF(112MW) has stepped up to 50MW after an outage in August SA Hornsdale Battery Farm expansion to 150MW is now operational More than 2GW of renewable generation projects have connected to the power grid since the beginning of the year, but many of these projects are still to reach full nameplate capacity due to the staged construction and connection of the projects or restrictions that have been imposed by AEMO. The following slides show the half hour output (MW) for a number of these projects across the NEM, revealing the progressive increase of available capacity.
  11. 11. 1 Oct 2020 Sep 2020VIC Generation Onboarding Source: AEMO Bulgana WF ramping up to 75MW of the 194MW approved Dundonnell WF overcomes restrictions with AEMO to reach 150MW. Once fully operational, is planned to be 336MW. Kiamal SF begins operation reaching nearly 30MW of the 200MW.
  12. 12. 1 Oct 2020 Sep 2020QLD Generation Onboarding Source: AEMO Coppers Gap WF has stepped up to almost 330MW, tracking to 453MW Warwick 1 and 2 SF has commenced operation tracking towards 64MW
  13. 13. 1 Oct 2020 Sep 2020NSW Generation Onboarding Coleambally SF (150MW) and Finley SF (175MW) is now able to coincidently export greater capacity but remains less than the total nameplate capacity. Darlington Point SF (275MW) with two synchronous condensers begins operation Limondale Solar Farm (249MW) is coming online
  14. 14. 1 Oct 2020 Sep 2020Wind Farm Capacity Factors In last month’s report, we showed the standout wind farms for VIC and NSW which recorded record high capacity factors. This month wind generation remained high across the NEM, although marginally lower in VIC and NSW. Kiata Wind Farm in VIC maintains first place with a capacity factor of 53.6% during September followed closely by Boco Rock Wind Farm in NSW. QLD and TAS saw record levels of wind generation during September (shown next slide) as Coopers Gap wind farm in QLD stepped up another 40MW towards its nameplate capacity, and in TAS Granville Harbour and Cattle Hill wind farms both stepped up another notch. VIC NSW
  15. 15. 1 Oct 2020 Sep 2020Wind Farm Capacity Factors Capacity Factors QLD, SA & TAS
  16. 16. 1 Oct 2020 Sep 2020 16 QLD At a Glance ❶ Average price for 2020 below $40/MWh … ❷ Record wind generation ... ❸ Record low demand… The QLD average spot price was the lowest for September in ten years as high intermittent generation and mild weather contributed record low levels of demand. The average spot price for September was just over $27/MWh, bringing the average for the year to date below $40/MWh. Wind generation was at a record level for the month with 151GWh generated during September. QLD’s wind capacity has been steadily increasing as the staged development of the 453MW Coopers Gap Wind Farm has gradually increased to 330MW since its connection in mid-2019. With record wind generation, and both Residential and Utility Scale solar already matching levels seen last summer, the daytime intraday prices were around zero during September. QLD also recorded a record portion of negative half hour spot price outcomes at 11.5%. QLD saw historically low total demand at 12pm on the 27 Sep 4,177MW with Scheduled Demand at record low 3,748MW. Lowest September in 10 years ❹ Negative prices …
  17. 17. 1 Oct 2020 Sep 2020 17 NSW At a Glance ❶ Soft spot prices … ❷ Record intermittent generation … NSW recorded the lowest average September price in six years at $41/MWh. September’s low average price brings the average price for 2020 to date below $60/MWh. ❸ Solar generation growing … Wind generation for NSW was slightly lower than last month’s record 476MWh, but when combined with a second highest month for both residential and utility solar, total intermittent generation was a record 1TWh for September NSW has added more than 800MW of new utility scale solar since the beginning of the year. The new capacity starting to flex its muscles during September with half hour capacity pushing through 1,000MW at the end of the month. Rooftop solar was also showing of increased capacity with half hour generation reaching 2,000MW. The Federal Government’s Liddell Taskforce Report was release this month stating that 1,000MW of dispatchable generation is required before the planned closure of power station in 2023. During September, NSW had daily outages of around 2,700MW on average. ❹ Liddell Taskforce Report released … Lowest September in 6 years
  18. 18. 1 Oct 2020 Sep 2020 18 VIC At a Glance ❹ Record low demand … ❶ Softening power price … ❸ Negative Prices … The VIC spot price fell by 35% compared to the previous month to just under $35/MWh and the lowest September average price in nine years. The average price for VIC year-to-date is now just below $57/MWh. During September, VIC recorded record low half hour total demand at 2pm on 6 Sep with 3,107MW and Scheduled Demand a record low of 2,713MW. High intermittent generation contributed to the second highest month for negative price half hours, and a whopping 85% of half hour spot price outcomes below $50/MWh. Wind generation during September was only marginally lower than the previous month’s record of 691GWh. In aggregate, intermittent generation was a record 974GWh during September as a result of almost 870MW of intermittent generating capacity commissioned over the past twelve month. ❷ Record intermittent generation … Lowest September in 9 years
  19. 19. © SavvyPlus Consulting 1 Oct 2020 Sep 2020 19 SA At a Glance ❶ Record low spot prices … ❷ Record intermittent generation … ❸ Record levels of negative prices … SA recorded historical levels of intermittent generation with 800GWh for September. ❹ Record low demand … The average spot price for SA fell by a massive 67% compared to the previous month at just $15.21/MWh for September, the lowest monthly average on record for SA. The average price in SA for 2020 is now below $50/MWh, and less than half the average price for the previous 3 years. SA recorded an astounding 21.5% of negatively priced half hour periods during September, a number never seen before in the NEM. Looking at the intraday price profile, both the median and average price were pushed far into negative territory. Lowest month on record Excluding the SA System Black in 2016, SA also recorded a record low total demand at 12pm on 13 Sep with 411MW with a record low Scheduled Demand at 1pm of 338MW.
  20. 20. 1 Oct 2020 Sep 2020 20 TAS At a Glance ❶ Softening power prices … ❹ Lower Hydro generation … The average spot price in TAS was the lowest for September in nine years at $37.52/MWh, bringing the average for the year down to $42/MWh. ❸ Price volatility … Hydro generation has notably pulled back from the high levels sceen during winter. Total hydro generation for the past two months has been substantially lower than the same time in past years. ❷ Record wind generation … High wind generation during September contributed to a high level of price volatility in Tasmania throughout the month. With the recent ramping up of the Granville Harbour and Cattle Hill Wind Farm projects, wind generation was a record 184GWh during September. Both these projects are only 50% commissioned so far. Lowest September in 9 years Water storage levels in Tasmania have been maintained around 40% since March this year. The current level of 41% is considerably lower the previous three years.
  21. 21. 1 Oct 2020 Sep 2020 21 Electricity Spot Price Wholesale electricity spot prices took a beating from record low demand and record intermittent generation levels across the NEM during September. The SA spot price fell by 67% compared to the previous month to $15.21/MWh, recording the lowest monthly average price in SA history, just fractionally higher than the NEM record low set by VIC with at $14.67/MWh in April 2003. SA also recorded a record number of negative half hour price outcomes during September at 21.5%. VIC also saw the average spot price for the month fall significantly, down 35.5% compared to the previous month at $34.65/MWh. Tasmania with record wind generation during the month fell by 32.7% with $37.52/MWh for September. QLD had the second lowest average spot price with $27.36/MWh, down 10% compared to August. NSW’s average spot price for September was $41/MWh. The risk-of-change is used to measure the potential price outcome for a relatively small change in demand (i.e. +/-100MW) in all states, except for SA and TAS which is +/-50MW. The risk-of-change in spot prices for QLD is for slightly higher spot price outcomes. Both NSW and VIC are showing a small risk-of-change for lower spot price outcomes. SA shows a high risk-of-change for lower spot price outcomes, while TAS has a high risk-of- change for higher spot price outcomes. In the intraday spot price profiles to the far right, all regions are showing significant downward pressure on spot prices during the middle of the day. QLD, NSW and VIC continue to show volatility in spot prices during the evening peak period. Tasmania showed significant volatility at all times during September
  22. 22. 1 Oct 2020 Sep 2020 22 Risk of Change Overview The risk of change is used to measure the potential price outcome for a relatively small change in demand (i.e. +/ 100MW) in all states, except for SA and TAS which is +/ 50MW. As mentioned in the previous page, QLD is showing an increased risk-of-change for higher spot price outcomes, the highest level in the past 12 months. NSW and VIC continue to show risk-of-change for lower spot price outcomes as has been the trend in recent months, but to a slightly lesser degree than the previous month. SA’s risk-of-change for lower spot price outcomes has increased significantly compared to previous months, while Tasmania continues to show a risk-of- change for higher spot price outcomes but significantly less risk compared to the previous month.
  23. 23. 1 Oct 2020 Sep 2020Q3-20 Spot Price Forecast 23 The dials to the right compare the current Q3-20 forward price against our spot forecast prepared in Q2-20. The lower and upper extremes of the dark grey area mark the 25th to 75th percentiles respectively, and the median is marked as the break in the dark area. QLD During September, the QLD Q3-20 forward price softened slightly to $32.15/MWh with is in the lower quartile of our spot forecast. NSW In NSW Q3-20 forward price also softened during September and remains below the 25th percentile of our spot simulations. VIC The VIC Q3-20 forward price fell by $5/MWh during September to just over $50/MWh and remains between the median and the 25th percentile of our spot forecast. SA During September, the SA forward price fell by almost $10/MWh and is now in the bottom quartile of our spot simulations. Q3-20 Flat Swap ($/MWh)
  24. 24. 1 Oct 2020 Sep 2020 24 Electricity Demand Total Energy consumption was lower for all regions except for TAS where total energy consumption was almost 5% higher than the same time last year at 912GWh. VIC saw Total energy consumptions fall by 5.5% compared to the previous year, while NSW’s saw a fall of 4%. Total energy consumptions in QLD was down 2.6% compared to the previous year, and SA was just 1% lower. In terms of Maximum Demand levels for September 2020 compared to the previous year: • NSW was almost 7% lower than the same time last year at 10,356MW. • QLD’s Maximum Demand was just 1% higher than the previous year at 7,540MW. • SA was slightly more than 1% higher than September 2019 at 2,206MW. • TAS was 4.6% higher than last year. • VIC saw Maximum Demand almost 5% lower than the same time last year. During the September VIC recorded record low half hour total demand at 2pm on 6 Sep with 3,107MW (shown by the bottom light blue line) with Scheduled Demand a record low of 2,713MW. QLD also historic low total demand at 12pm on the 27 Sep 4,177MW (shown by the bottom brown line) with Scheduled Demand a record low 3,748MW. Excluding the SA System Black in 2016, SA also recorded a record low total demand at 12pm on 13 Sep with 411MW (shown by the bottom pink line) with a record low Scheduled Demand at 1pm of 338MW. TAS has morning low demand outlier on 3 Sep with total demand of 971MW. NSW had a few outliers of high evening demand with just the 1st and 9th of September recording demand above 10,000MW.
  25. 25. 1 Oct 2020 Sep 2020 25 Weather Pattern Average temperatures for September were higher for all regions compared to the same time last year, particularly in NSW, SA and VIC. The demand weighted maximum daily temperature jumped from 13.4 degrees in August to 16.2 degrees for September. The plot charts to the right compare maximum daily temperatures with daily total energy consumption and maximum demand levels. QLD last month showed less high temperature days over 30 degrees compared to last year. NSW in contrast showed a higher number of warm days around 30 degrees. Temperature and demand patterns is SA, TAS and VIC were more similar to the same time last year. The charts below left show weather dependent energy across the NEM, with SA having the most weather dependent energy. Like VIC shown below, the majority of regions showed a decrease in weather dependent energy.
  26. 26. 1 Oct 2020 Sep 2020 26 Weather Dependency A look at historical weather dependency across the NEM shows that SA’s energy is driven the most by weather, often by more than 20% and particularly during the summer months. SA’s weather dependent energy was slightly lower than the previous month but remains at a high level. Weather dependent energy in QLD has decreased over the past two months. In NSW, following very high weather dependent energy during August above 10%, the level fell by almost half during September. In VIC the level was slightly lower than the previous month but remains around 10% and Tasmania was also lower then the previous two months.
  27. 27. 1 Oct 2020 Sep 2020Forward Prices 27 In the risk-of-change metrics to the right, all regions are showing a significant risk-of-change in the forward price. The electricity forward market softened during September across the NEM. Looking at Cal-21 forward prices: • QLD softened by more than $1/MWh to $40.30/MWh. • NSW fell by $2/MWh to 53.20/MWh. • The VIC Cal-21 price fell by $4/MWh to $54.51/MWh. • TAS softened by just over $3/MWh to 54.16/MWh. • SA fell by more than $6/MWh to $50/MWh.
  28. 28. 1 Oct 2020 Sep 2020 Generation Mix: During September, record wind generation saw the share of wind generation in total generation for the NEM increase by 1.7% to over 13%. Black coal generation’s share of total NEM generation fell by 1.3% to 47.5%. The share of gas-fired generation fell by more than 3% during September to less than 5% of all generation. Utility Solar increased it’s share by almost 1% to 3.7% and Residential Solar gained 1.6% more share for a total of 7.2% of all NEM generation for September. Battery generation doubled during September from 0.03% to 0.06%. Total generation for the NEM decreased during September by a massive 10% or 1.8TWh to 15.8TWh for the month. Baseload generation was 12% lower than the previous month down 1.3TWh to 10.2TWh for September. Black Coal generation was 13% lower than the previous month a drop of more than 1TWh to 7.5TWh, the lowest level since April 2014. Brown Coal fired generation was 9% lower than the previous month with 2.7TWh. Non-Baseload generation was 8% lower for September despite wind generation setting a new record with monthly generation above 2TWh for the first time in history. Meanwhile, gas-fired generation was a record low 781GWh for September. Hydro generation was 13% lower then the previous month with just 1TWh. Utility scale solar was 20% higher with 585GWh during September, while Residential Solar was 16% higher than the previous month at 1.1TWh. Battery generation was also at record levels with 9.7GWh during the month. Outages: QLD experienced less outages than the previous month with around 1,500MW of capacity offline during September. Gladstone had one unit with 562MW out for the month. Callide had a unit with 385MW out for the month, while Callide C had a unit with 441MW out for all but the last two days of September. Stanwell had a 15 day outage with 382MW and Tarong had one unit with 357MW out for 14 days. NSW had around 2,500MW or higher out during September. Bayswater had 673MW out for the month. Eraring had 750MW out for the month. Liddell had between 500-1500MW, Vales Point B had 662MW out for 12 days and Mt Piper had a 5 day outage of 702MW late in the month. In VIC, Yallourn had one unit with 394MW out all month and another 408MW unit out for 12 days. Loy Yang A had one unit (576MW) out for 12 days and Loy Yang B had 550MW out for 2 weeks. Generation Mix 28 Sep Solar 2.8% Aug
  29. 29. 1 Oct 2020 Sep 2020 29 Generation Strategies VICSA NSW During September spot prices fell dramatically across all regions in the NEM. In SA there was less capacity offered overall, led by AGL who with less capacity offered in the lower price bands. In Victoria there was also less capacity offered overall. It was AGL who offered less capacity again in both the lower price bands and the extreme price bands above $5,000/MWh. Less capacity was also offered in NSW particularly in the lower price bands led by EnergyAustralia and Origin. In QLD less capacity was offered overall led by Origin who offered less capacity in the lower price bands, while Arrow Energy and CleanCo offered less capacity in the extreme price bands. Tasmania (not shown) offered a similar capacity overall during September while exchanging capacity offered in the extreme price bands for capacity offered below $100/MWh. QLD
  30. 30. 1 Oct 2020 Sep 2020Interconnector Flows 30 Exports across the QNI interconnector from QLD to NSW were significantly lower than previous months with a net flow of just 278GWh during September. The QNI interconnector was constrained 25% of the time during the month. Energy transfer across the NSW-VIC link increased in the direction of NSW during September with a net flow of 255GWh for the month. The NSW-VIC link was constrained 18.5% of the time during September. Energy flow across the Heywood interconnector increased in the direction of Victoria during September. Net flow was 108GWh for the month and the interconnector was constrained 18.7% of the time. Flow from TAS to VIC across the Basslink increased during September, while energy flow from VIC to TAS was lower than the previous month. The net flow across Basslink during September was just 30GWh towards Tasmania. Basslink was more constrained during September compared to the previous month at 7.8% of the time.
  31. 31. 1 Oct 2020 Sep 2020Water Storages 31 Snowy Hydro’s water storage levels increased during September with the monthly average reaching 31%. Snowy Hydro generation was significantly lower during September, falling from 406GWh in August to just 248GWh during September. The current level for September is higher than the previous two years, but well below historical levels for this time of the year. Hydro Tasmania’s water storage levels increased slightly during September with an average level of 41% for September. Total generation for Hydro Tas was just marginally lower than the previous month at 691GWh. The average storage level for September was around 10% lower then the previous couple of years
  32. 32. 1 Oct 2020 Sep 2020Gas Spot Prices 32 The average daily wholesale gas prices increased again in QLD for the third month running, with the average price for September just above $5/GJ. The southern states all saw gas spot prices fall during September. The average gas spot price for NSW softened to $4.29/GJ. In VIC the average monthly gas price has been in steady decline since mid 2019 and was just below $4/GJ for September. The average price in SA also softened for the second consecutive month and was $4.63/GJ for September.
  33. 33. 1 Oct 2020 Sep 2020Summary LNG Exports 33 From the most recent information available from the Gladstone Port Authority, LNG exports increased substantially in September compare to the previous four months with 28 shipments to six different destinations during the month. Total exports for September was 1.84m tonnes compared to 1.67m tonnes the previous month. China received 20 LNG cargo vessels during September for a total of over 1.2m tonnes. Korea was the next highest recipient of Australian LNG receiving 6 shipments for a total of 363,300 tonnes. The remaining four regions being Japan, Malaysia, India and Singapore, all received just one LNG cargo vessel during September of around 60,000 tonnes. Total exports to China for 2020 to date is 66.7% of all exports, with the next largest export destination being Korea with 15%. Malaysia has a 9.3% share of LNG exports, followed by Japan at 6.1% , Singapore with close to 2.1% and Chile with just 0.45% of all LNG Exports. Exports Year To Date
  34. 34. 1 Oct 2020 Sep 2020Enviro Spot Certificate Prices 34 The LGC spot price softened by about $5/certificate during September to a close of $42/certificate. The STC price rallied during the month to above $39/certificate before softening to a close of $38.48 per certificate. 31-Jul-20 31-Jul-20 $41.00 $38.23
  35. 35. 1 Oct 2020 Sep 2020 35 ‘Old’ Hydro LGCs LGCs Baseline forecast Assuming for the balance of year Hydro Tas generation is the same as last year, the number of additional LGC’s will now be an estimated 1.5m. Hydro power stations that have now passed their LGC baseline are Catagunya/Liapootah/Wayatinah, Gordon, Lake Echo and Tribute Power Stations in Tasmania, and Bogon/Mackay Power Station in Victoria. The total potential number of LGCs that could be created assuming 2019 dispatch is repeated for the balance of 2020, is about 1.5m. In the context of the LGC annual target of 38m, this represents about 3.9%. The potential value of the LGCs will depend when sold, but if sold at: • Cal-20 forward price implies potential value of almost $63m • Cal-21 forward price implies potential value of $49m State LGCs Cal-20 LGC Price Cal-21 LGC Price Market Value (Cal-20) Market Value (Cal-21) TAS 1,419,092 $42.38 $32.83 $60,141,000 $46,589,000 VIC 71,402 $42.38 $32.83 $3,026,000 $2,344,000 Total 1,490,494 $63,167,000 $48,933,000 Potential 1.5m additional LGCs Potential market value of … $48.9m to $63.2m TAS VIC
  36. 36. 1 Oct 2020 Sep 2020Enviro Spot Certificate Prices 36 In NSW, the ESC spot price rallied early in the month reaching almost $28/certificate, then softened in the second half of the month to close below $27/certificate. In Victoria, VEEC’s also saw an early rally before softening to a close of $33.25/certificate. $34.93$25.25 31-Jul-20 31-Jul-20
  37. 37. 1 Oct 2020 Sep 2020Enviro Forward Prices 37 Looking to the LGC forward market, forward prices had been climbing steadily during the past two quarters. Prices took a turn during month with significant falls seen in Cal-20, Cal-21 and Cal- 22 forward prices. The Cal-20 forward price approached $50/certificate mid-September before falling in the second half of the month to a close of $42/certificate. The Cal-21 LGC forward price fell by $3/certificate from it’s peak in mid-September to a close of $32.83/certificate. Cal-22 softened slightly to a close of $24/certificate. Cal-23 closed at 13.20/certificate and Cal-24 fell to just $5/certificate.
  38. 38. 1 Oct 2020 Sep 2020 The El Niño-Southern Oscillation (ENSO) has now reached La Niña thresholds. The ENSO outlook indicates further cooling of eastern tropical Pacific Ocean sea surface temperatures is likely and that La Niña thresholds will likely be sustained until at least January 2021. La Niña conditions generally result in above average rainfall over much of Australia. 38 The remainder of 2020 is likely to see above average rainfall across the eastern two thirds of the country. Large areas of southern SA and inland NSW have an 80% or higher chance of exceeding median rainfall. Most of WA has around average or slightly above average chance of exceeding median rainfall. In Tasmania, the chance of exceeding the median is above average in the NE but below average in the SW. Weather Report & Outlooks The BOM’s median maximum temperature outlook for the remainder of the year shows an average chance of exceeding median maximum temperatures for most of NSW, South-eastern QLD and most of SA. Perth and southern Victoria have a slightly above average chance of exceeding median maximum temperatures. The far north coast of the country from QLD through to WA as well as Tasmania have high chance of exceeding median maximum temperatures. Source: BOM ENSO OutlookTemperature Outlook Rainfall Outlook v v Oct-Dec Oct-Dec

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